Oh, Canada! Avigilon and Alimentation Couche-Tard

The U.S. stock market has been overvalued for quite some time. Canadian stocks, on the other hand, have been selling at very reasonable prices, suggests Roy Ward, value investing specialist and editor of Cabot Benjamin Graham Value Investor.

The Canadian economy had been sputtering along with GDP growth of less than 2% for the past 30 years. Now however, Canadian growth is beginning to accelerate and should exceed 2% in 2018—making now an excellent time to add Canadian stocks to your portfolio!

In August, I first recommended Avigilon (Toronto: AVO) (OTC: AIOCF). This month, I add Alimentation Couche-Tard (Toronto: ATDB) (OTC: ANCUF) to our Model Portfolio. These companies are poised to participate in the economic resurgence in Canada.

Management plans to continue growing sales, but with a “stronger focus” on increasing profitability. Avigilon sales have been strong during the past five years, but earnings have been lagging. Now, the company’s earnings will likely grow at a much livelier pace.

Avigilon’s new earnings growth path has helped propel the company’s stock price substantially higher during the past nine months and bodes well for the future. The current 15.1 P/E based on current EPS, is easily justified by Avigilon’s growth prospects.

Alimentation Couche-Tard, or simply Couche-Tard, is a Canadian company established in 1980 with headquarters in Laval, Quebec. It is the leader in the Canadian convenience store industry. In the U.S. under its Circle K brand, the company is one of the largest independent convenience store operators.

Couche-Tard has been very active on the acquisition front from its beginning, which has enabled the company to grow sales and earnings at a steady, rapid clip during the past 37 years.

The company boasts a strong balance sheet and produces abundant cash flow. With a P/E of 19.1 times current EPS, and expected five-year earnings growth of 16.5%, ATDB.TO shares are very reasonably priced.